Economics is the study of how humans choose to use scarce resources. This may be at the global/national level or for individuals, households and firms. One can see concepts from economics in myriad daily situations — hence the title of this column. This is true in spades for a little dustup in our neighborhood of St. Anthony Park, where a beautiful tree by our beloved neighborhood library is to be cut down to replace a century old sewer line. Whether that happens or not, much applied economics can be learned from the controversy.
Trees are beneficial things to have in a neighborhood. They clean the air, give shade, protect us from wind, and are beautiful and good for human souls. To a great extent, economically speaking, they are “collective goods.” That means many different people can benefit from them at the same time. Within the normal population of a neighborhood, benefits from a tree are “nonrival;” that is, my enjoyment of its beauty or shade does not diminish that of anyone else.
People plant trees on their own property. Some benefits of private trees flow to the general community, especially the moderation of weather and cleaning of air. But other benefits are “excludable” — you can appreciate a tree as you pass on a public street or sidewalk, but the property owner can keep you from taking its fruit or nuts or from hanging your hammock under its boughs.
In such situations, when private owners can keep some of the benefits from an investment, like planting a tree, but other benefits “spill over’ to the general public, a free market will never produce enough of the item in question. Some homeowners might plant a boulevard tree, but many others would not. We would have few public parks at all if left to pure volunteerism. Boulevards, parks and library grounds provide benefits that are both nonrival and nonexcludable. Benefit to one does not diminish benefit to others and it is difficult to limit who uses them.
Individual books are “private goods” just like oranges or bicycles. If I am reading a book, someone else cannot the exact same book at the same time, unless they rudely look over my shoulder. And I can stop others from reading my copy of the book. So use is rival and excludable. Education can be also. A school can have capacity for a certain number of students, and unless tuition is paid, they can be excluded. So education was a private good for centuries.
However, there are “spillover benefits” to society as a whole from much education and from libraries. Our economy is more productive and democracy functions better if people are well-educated and well-informed. Just as for boulevard trees and parks, we would have some schools or libraries without government, but not nearly to a degree that is optimal for society.
This is even truer for streets, safe water and sewers and public health and safety. All are “public goods” that require collective action through government. Without them, our economy would be less productive.
That brings us to the elm tree at the south end of the library. Someone planted it a century or more ago and it now has a girth of 10 feet and some 65 feet in height. It is beautiful and appreciated by many residents. The city of St. Paul is completely rebuilding the street, including all utilities, which is a commendable strategy of investing in public infrastructure. It is a good opportunity for property owners to upgrade their own water and sewer lines. Those of the library, also owned by St. Paul, date to 1917, when it was built with funds from Andrew Carnegie. So library officials asked public works to replace the sewer. All is well and good.
The problem is that the sewer line from library to mainline in the center of the street runs under the tree. Hence, someone decided, it must be cut down to allow the line’s replacement. At this some of us as residents have balked. We thought someone could find an easier way. Could the sewer be relined with widely used new technology? Could most be dug up conventionally, but the small portion actually under the tree roots replaced by horizontal drilling or pipe jacking? Or, could the old line just be plugged and a new line put in a trench that dog-legged between the trees?
The official in charge of the project says there is no way of ascertaining whether the line could be refurbished, no budget for installation other than with an open trench and that the contractor does not have the equipment. However, there are funds to remove the tree, which must run to thousands of dollars.
I am not an engineer, and must defer to the experts. But I am a farm boy whose net worth derives from family investment in drainage over decades. I hire backhoe work done every year and have spent a fair bit of my own time down in trenches. Gazing from the library lawn, my reaction is “Oh, for Pete’s sake, any backhoe operator from rural Minnesota could put in the hundred or so feet of pipe in one afternoon for $120 an hour and the cost of material, without harming any tree.”
That gut reaction, however, ignores much. There are multiple “information problems.” The public works department must juggle thousands of considerations. Much must be torn out and replaced. But vehicles still need to transit the neighborhood. Residents need uninterrupted utilities. Thousands of tons of earth and other materials need to be moved out and back in. Thousands of interrelated tasks have to be scheduled and coordinated. Residents have differing views on many issues and one tree is a minor one. Budgets are limited and unexpected snags always arise. Engineers and project managers are stretched thin. So who really knows?
Back to economics. Public goods like streets, sewers, libraries and boulevard trees have substantial value to society. But quantifying these values is not as easy as for private goods. If companies are willing to sell gasoline for $2.59 a gallon and people are willing to buy it, there is a clear market value. Ditto for a house that changes hands at $425,000 or an artichoke dip appetizer at $7.99.
But what is a publicly-owned tree worth? Corporations that want to jump-start the looks of a new headquarters pay tens of thousands of dollars for trees smaller than this one. If neighborhood residents started a crowdsourcing campaign to save this tree, I am sure we could raise some thousands of dollars. But economic theory and history are clear. Because of the “freeriding” that makes public streets, schools and libraries necessary in the first place, any voluntary campaign will not raise a sum equivalent to the tree’s social value. And a similar campaign in a poorer neighborhood would fizzle. Does that mean Frogtown or Phalen-Payne residents don’t value or deserve trees?
Ideally, government projects should undergo some cost-benefit evaluation. And starting in the 1980s, “value engineering” that applied tools of financial analysis to all sort of design problems, private and public, was a hot topic. But “transaction costs” limit the fineness of resolution in all these studies. You cannot expect a project engineer to do a cost-benefit analysis on every tree affected by a multimillion dollar project. Yet you should also avoid situations where the mere cost of removing a tree is greater than the cost of the entire project done in a more sensible manner.
Other points stand out. British political thinker Edmund Burke wrote of “the little platoon” of neighbors in community that are the root of civilized society. In a stable, highly-educated, upper-income neighborhood like St. Anthony Park, our civic little platoons are well-drilled and ready to deploy on issues like one tree. We have a much-used neighborhood usenet on which someone raised the alarm. Within a day we had it identified as an Ulmus Rubra or slippery elm, with girth measured by four different people and height measured by a forester with a laser hypsometer. In less-advantaged neighborhoods, this is not as true. Squeaking political wheels do get greased and advantaged neighborhoods get responses that disadvantaged ones do not. That may be a fact of life, but is unjustice.
Local politics will grind along and the tree will perish or survive. I can be as objective as I can as an academic in identifying the economic phenomena at play. But I still don’t know why in h-e-double-hockey-sticks it should be so hard to conduct a little poo a hundred feet from the library to the street without spending thousands of dollars to cut down a beautiful healthy tree.